17) Eleven years ago, Bailey Industries issued twenty-five years%ar and with sem

Question

17) Eleven years ago, Bailey Industries issued twenty-five years%ar and with semiannual sísnow7%Giventhin,interestratesin generalo aveidswindsuhtacevalue tnis information. what would be the price today for aBailey alcoup Industries bond? A) $1,005.27 B)$1,087.16 C) $823.33 D) $825.09 18) Which of the following statements is TRUE? A) If you anticipate an increase in interest rates, you should purcha B) The current yield on a bond represents the income part ot the inves C) Lenders issue bonds.. D) Ceteris paribus, bonds investor's total return with higher coupon rates would have lower prices Iaterest rates in the U.S were extremely high in the early 1980a because of high maturity premiums. he inflation premium is estimated by the author to be the largest component of nominal interest rates in he period 1950-1999 f interest is compounded more than once a year. 19) Which of the following statements is TRUE? the APR would exceed the EAR. Ceteris paribus, the higher the nominal interest rate the higher the rsal interest rate.

Explanation / Answer

17). Answer - c is correctly marked

18) B statement is - True

19). B statement is - True - Inflation averaged 4.05% from 1950 -1999

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